The Mobile Workforce State Income Tax Simplification Act of 2015 is a bipartisan bill currently pending before Congress, aimed at providing a 30-day exempt period from a state’s income tax for nonresident employees temporarily conducting business in a state. This grace period would also apply to an employer’s withholding requirements. In other words, traveling, nonresident employees would have no personal income tax liability in a state in which business is conducted for less than 30 days per year and their employers would have no withholding obligation.
This proposed act, however, would not apply to athletes, entertainers and the like. These individuals who are paid substantially on the basis of specific events will continue to have individual income tax liability in the nonresident state.
This proposed act has companion bills pending in both the House of Representatives and Senate. House bill H.R. 2315 was introduced on May 14, 2015, by Representative Mike Bishop (R-MI) and Representative Hank Johnson (D-GA). Senate bill S. 386 was introduced on Feb. 5, 2015, by Senator John Thune (R-SD) and Senator Sherrod Brown (D-OH).
“This important bipartisan legislation simplifies the tax code and would help Americans who work across multiple jurisdictions from being taxed by state and local governments other than the places in which they live or perform duties over an extended period,“ said Rep. Johnson. Thus, an employee would only have state income tax liability in states in which work is done for more than 30 days each year, and would remain fully liable for the state individual income tax where the employee resides.
Although states have specific thresholds in place for the amount of time a nonresident employee must work in the state before being taxed, there is no uniformity across the states. Some states, like Colorado, will tax any income earned within the state if an individual has worked there at least one day. Others, like Hawaii and Arizona, have much more generous requirements, only requiring withholding for work that exceeds 60 days. Other states do not use a time requirement at all; rather, taxation is based on a specific dollar figure earned while in the state.
The Mobile Workforce State Income Tax Simplification Act of 2015 is intended to lessen the burden of reporting requirements on employers and minimize confusion for taxpayers, all while increasing tax compliance.
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Do states stand to lose a significant amount of revenue if the Mobile Workforce State Income Tax Simplification Act of 2015 is enacted?
For more information regarding withholding see the Individual income Tax Navigator.
Take a free trial to Premier State Tax Library, a comprehensive research service that delivers deep, unique analysis, and time-saving practice tools to help practitioners make well-informed decisions.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)